GLOBAL BRIEF: SA agencies in dispute over black empowerment - The race credentials of a successful shop are under scrutiny, Jade Garrett says

Earlier this month three South African ad agencies - Herdbuoys McCann-Erickson, Skotaville Communications Group and Azaguys Advertising & Marketing - lodged a joint complaint with the Public Protector over the awarding of Government contracts to a fourth party, The Agency.

Earlier this month three South African ad agencies - Herdbuoys

McCann-Erickson, Skotaville Communications Group and Azaguys Advertising

& Marketing - lodged a joint complaint with the Public Protector over

the awarding of Government contracts to a fourth party, The Agency.



In the complaint they claim that The Agency, which is 100 per cent owned

by the listed communications group, Billboard, could have provided a

misleading submission in relation to its shareholding and black economic

empowerment structure.



The law in South Africa states that previously disadvantaged individuals

or institutions will be looked at favourably for Government tenders. At

least 30 per cent of company management should represent these

groups.



The Agency’s chairman, Johan Huyser, has stated that 51 per cent of his

company’s equity was in the hands of black shareholders (Business

Report, 2 May). An advertisement for The Agency states that ’we are the

largest and leading truly black-owned agency’.



A source close to the dispute said: ’There has been a lack of full

disclosure on the part of The Agency. It claims to be an empowered group

but that has never been proved. The issue of empowerment should not be

undermined.’



The submission specifically relates to the awarding of the Telkom, Post

Office and Metro rail accounts - together worth about R125 million - to

The Agency, but an investigation into other accounts is now being

requested. These include the National Parks Board, the South African

Bureau of Standards and the Department of Labour.



Telkom has instructed its external auditor, Pricewaterhouse, to review

the ownership structure of The Agency at the time of tender.



’This is the biggest load of rubbish I’ve heard in my life,’ Huyser

says.



’We are a public company and will give our full co-operation to the

Public Protector if it decides to contact us - but it hasn’t yet. We are

the most empowered company in the country, we are winning the business

and others don’t like that. This is about professional jealousy.’



At the beginning of the year, the Post Office requested submissions for

a credentials pitch for its marketing and advertising account, which was

subsequently awarded to The Agency. There are additional allegations

fuelling the dispute that The Agency was privy to information from the

Post Office at this stage which was withheld from other agencies.



In a letter from the Post Office’s senior general manager for human

resources to an unsuccessful agency, he says the account was awarded to

The Agency because of its ’ability to do the job, price and black

economic empowerment’.



The submission to the Public Protector argued that no reference to price

was mentioned in the invitation to tender and so could not have been a

criterion. This has raised the question of why, if this was the case,

The Agency had access to information its rivals did not. The dispute is

expected to be resolved by the end of the month.